Multiple Choice
Use the following setup for the next question.
A publisher is deciding whether or not to invest in a new printer.The printer would cost $900,and would increase the cash flows in year 1 by $500 and in year 3 by $800.Cash flows do not change in year 2.If the interest rate is 12%
-If the interest rate is 25%,but cash flows change such that the investment renders a cash flow of $500 in year 1 and $800 in year 2 instead of year 3,would the investment take place?
A) Yes since NPV>0
B) No since NPV<0
C) Yes since the present value of the cash flows is greater than zero
D) No since the present value of the cash flows is lesser than zero
Correct Answer:
Verified
Correct Answer:
Verified
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